Lithium iron phosphate (LFP) cathode materials are becoming the dominant chemistry in the global lithium-ion battery cathode market, driven by entry-level electric vehicles and energy storage systems (ESS). Shipments are projected to reach 5.24 million tons this year, a 51% increase from last year, lifting LFP's share to 77%. SNE Research said LFP shipments rose from 2.36 million tons, or 64% of the 3.7 million-ton market, in 2024 to 3.47 million tons, or 72%, last year. First-half shipments grew 73% year over year, taking the share to 76%. LFP offers lower costs, greater thermal safety and longer cycle life than nickel-cobalt-based ternary cathodes, although its energy density is lower. ESS demand is also accelerating as artificial-intelligence data centers require more electricity and renewable generation increases the need for large-scale storage. Global ESS battery shipments reached 461.3 GWh in the first half of this year, up 71%, while North American shipments rose 83% to 75.9 GWh. China produced approximately 2.7 million tons of LFP in the first half of this year, up 73%, and average capacity utilization among its manufacturers exceeded 80%. Persistent oversupply in commodity-grade products is pushing Chinese producers toward high-density LFP, including materials with compression density above 2.6 g/cc and lithium manganese iron phosphate (LMFP), which could raise energy density by approximately 15% to 20%. South Korean battery makers are building LFP capacity and supply chains for North American ESS. LG Energy Solution's Lansing, Michigan, plant began full operations last month, targeting annual capacity above 35 GWh for LFP ESS and nickel-cobalt-manganese EV batteries. Samsung SDI plans mass production at its Indiana facility in the fourth quarter and agreed to buy cathode materials from L&F for approximately ₩1.6 trillion, or about $1.2 billion, over three years beginning next year. SK On signed a separate L&F agreement worth approximately ₩160 billion, or $116.0 million, through 2028, and previously agreed to supply 9 GWh of ESS LFP batteries to Neovolta Power. Prismatic batteries are expected to account for 94% of the global ESS market this year, dip to 92% next year as pouch-cell supply for the U.S. expands, and reach 97% by 2035. Annual ESS battery shipments are projected to rise from 984 GWh this year to 1,150 GWh next year and 1,870 GWh by 2035. South Korean companies are seeking to challenge Chinese price-led dominance in the U.S. with prismatic technology, but their longer-term success will depend on high-density, fast-charging and low-temperature products, as well as local production and supply chains serving AI data centers and power grids.